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Which Side of the Barricade Are You On?

One factor that has perpetuated the income gap is educational achievement – the single best predictor for future financial success. Since educational opportunities are disproportionately afforded to families at the top of the income ladder, the children of the less fortunate are finding social advancement through educational achievement even more difficult.

A June 2013 Brookings Institution Hamilton Project report found that “children of well-off families are disproportionately likely to stay well off and children of poor families are very likely to remain poor.” High-income parents are investing more in their children, widening the gap between the children of the rich and poor in test scores, college attendance and graduation. These gaps – combined with expanding income inequality – further threaten the ability of the next generation to improve their lot in life. The report also cites an earlier 2010 Carnezale and Strohl study that found that in most selective higher education institutions “… the wealthiest students out-populate the poorest students by a margin of 14 to one.”

Research conducted by MIT economists Daron Acemoglu and David Autor in 2010 shows that for males, the wage gap by education began to widen in our country at the beginning of the 1980s. While male workers who went to graduate school before that time consistently outperformed everyone else in income levels, there was not a significant variation in wage levels among male workers who either graduated or attended college, graduated high school or dropped out before completing their studies. However, during the 1980s, a widening income gap emerged between college graduates and those with little or no college participation, making education the defining predictor of a person’s chances for financial success in the future.

America’s emerging populist movement

Plutocracy (Plu-toc-ra-cy): An elite or ruling class of people whose power derives from their wealth

Most of the daily attention in American politics centers on the “who’s up and who’s down” in the two-party system rather than focusing on the underlying trends that cut across both parties in terms of where the country is headed. Neither political party has actually been winning this debate; it has really been more about which party has been losing it.

For the three election cycles between 2006 and 2010, the country voted against the status quo, punishing the party in power. The existing problems have been building for a long time, and the current partisanship and gridlock suggest that there is every reason to believe that the trend will continue in the 2014 elections and beyond.

The governmental dysfunction, as well as the implementation of Obamacare, is a daily reminder for most Americans about just how broken our government is at the federal level. As if that’s not enough, Americans need look no further than the soaring stock market to remind themselves that the rich are getting richer while everyone else is struggling to get by.

More and more we are beginning to see populists from the left and the right band together to fight a broken system that fails to address the concerns of the American people. Senators like Elizabeth Warren and Rand Paul share the same point of view on many of the issues that have surfaced. It wouldn’t be surprising to see them working together on issues in the future. In particular, there are several areas of consensus that will provide the foundation for this movement going forward:

1. A pull back from the rest of the world with more of an inward focus. The country is exhausted from the two wars that date back over a decade. They are tired of risking American lives for what appear to be intractable problems, and they are tired of paying for these wars. A general sense is starting to build across party lines that with all of our problems at home the last thing that we should be doing is bearing the heavy costs of these wars and the burdens of the unfinished cleanup in other parts of the world.

2. A desire to go after the big banks and other large financial institutions. There is an overwhelming belief that the financial institutions played a major role in the recent global recession, while taxpayers paid the price for their malfeasance and the damage they caused to the rest of the country. Americans see the financial industry reaping huge financial benefits and they have concluded that the bad actors were rewarded for their misdeeds, instead of being punished like they deserved.

3. The elimination of corporate welfare. The country is increasingly making a distinction between small business and large corporations. While support for small business owners continues to be high, Americans are viewing big business as yet one more pillar of the plutocracy that benefits from gaming the system to enrich shareholders at the expense of the rest of the country.

4. Reducing special deals for the rich. While there is more of an appetite from the left to go after the rich in our society, there is general agreement from both ends of the political spectrum that we should eliminate any special deals that benefit the wealthiest. Several states led by Republican-controlled statehouses and legislatures have advocated for a cap on homeowner deductions for the most expensive homes, as well as an elimination of deductions for second homes. Some localities have put a tax surcharge on the highest income families to pay for local services. As the federal government pushes more mandates on states, and state budgets get tighter, this trend of squeezing more from the wealthy is likely to continue.

5. Pushing back on the violation of the public’s privacy by the government and big businesses. The United States lags far behind most of Europe—Germany in particular—when it comes to protecting individuals’ rights to privacy. Throughout Europe there are many more limits on the ability of government and private industry to gain access and use of personal data for their own purposes. The privacy issue will gain more attention as technology continues to improve and becomes more invasive. The issue isn’t a partisan one. It is hard to distinguish between the policies of the Bush and Obama administrations when it comes to placing limits on gathering and using people’s personal information for what they perceive to be in the national interest. Moving forward, we are likely to see the curbs and restrictions throughout Europe become more of the norm in our country as the public begins to voice its outrage at what they view as intrusions into their personal lives.

6. Reducing the size of government. There is no institution that better symbolizes Americans’ disgust with the status quo than the federal government. Congress has long been one of the least respected institutions in our country and Obama’s precipitous drop this year has spread this discontent to the executive branch of government as well. According to Gallup, even the Supreme Court’s popularity has dropped 16 points since the summer of 2000.

While a sizeable group of Americans continues to support the active role of government, the Republican Party in general and the Tea Party in particular have made reducing the size of government the centerpiece of their agenda since Obama became president. Political moderates have been skeptical about the role of government, but they have consistently recognized the benefits to some government programs and rejected the more extreme Republican and Tea Party positions when it comes to massive cuts.

In 2011, when the two parties cut a budget deal that included the subsequent threat of sequester if they failed to resolve their differences, most people thought that such a draconian measure would never materialize because of the public outrage that was sure to surface if it ever went into effect. As everyone now knows, the negotiations failed and the cuts took place, and the widely anticipated outrage to reinstate the program cuts never happened.

The current problems around the implementation of Obama’s health care program are likely to become a seminal moment that symbolizes government’s perceived incompetence and its inability to capably manage the taxpayers’ money. There will be increased pressure to continue to reduce the size of the federal government going forward as the political middle moves away from a more activist government.

America has been, and continues to be, a center-right country. We can be sure that these issues will dominate the presidential primaries and continue through the next presidential general election.

The decline of the political parties

One biproduct of all of the anger toward the political class is the disapproval ratings of both political parties. The late October NBC/Wall Street Journalpoll showed the Republican Party with a 22 percent positive rating and a 53 percent negative one. Although Democrats are doing better, they are also underwater, with a 37 percent positive rating and a 40 percent negative one.

Due to recent Supreme Court rulings, power and money has flowed away from both parties. With this increasingly decentralized party structure, political entrepreneurs are increasing dominating the debate, making the parties less important in the political process.

There is clearly an opening for a third party in our country. While most of the focus is at the presidential level, there is a long-term opportunity to build this movement from the bottom up, state-by-state. This could take several years to grow, but as the country continues to move further and further away from the two-party system, this slower build is more likely to ultimately metastasize into an effective national movement. This third party will most likely be led by community-based leaders who are focused on getting things done to improve people’s lives rather than by professional politicians interested in their own agenda.